Concerned that New Jersey residents already receive the lowest rate of return of any state on tax dollars sent to Washington, Senators Tom Kean (R-21), Steven Oroho (R-24) and Joe Kyrillos (R-13) questioned the equity of a new plan by President Obama to levy a new tax on investment income that would be borne disproportionately by New Jersey residents.
To help fund his multi-trillion dollar healthcare proposal, the President’s new plan, released on February 22, calls for the addition of a 2.9% Medicare tax on certain income, including that derived from interest, dividends, annuities, royalties and rent. This new tax would apply to individuals earning more than $200,000 and $250,000 for married couples filing jointly.
“Year after year, New Jersey residents get less back from the federal government than the residents of any other state,” said Kean. “Now, President Obama wants New Jersey to bear the burden of paying for his healthcare proposal. Even worse, this tax is directed at the very people who would be most likely to create jobs for out of work New Jerseyans.”
Data from the Tax Foundation show that New Jersey receives back just 61 cents in federal spending for every tax dollar sent by state residents to the federal government, the lowest rate of return of any state. With a rank of 42 out of 50, New York doesn’t fare much better.
Following the release of the President’s plan, an analysis by the Manhattan Institute shows that the residents of New York and New Jersey would pay a whopping 25% of the total revenue generated by the new income tax. When Connecticut is factored in, the residents of the tri-state region would pay almost 1/3 of the total tax. New Jersey’s share is estimated to be up to 9% of the total.
“The people of New Jersey are already struggling with a 10% unemployment rate, the highest property taxes in the nation, and the flight of wealth to lower tax states,” said Oroho. “With state residents already suffering under a massive tax burden, the President’s new income tax amounts to another straw on the already broken camel’s back.”
The senators called on the state’s congressional delegation to take action on the new tax. “We are hopeful that our representatives in Congress will tell the President to remove this tax from his plan,” said Kyrillos. “It’s not equitable for one or two states to pay so much and get back so little, especially when we’re talking about paying for a multi-trillion dollar healthcare plan. Our congressmen should tell President Obama to go back to the drawing board.”